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= UPDATE: China 1Q GDP Up 10.2% Vs Expected 9.7% Rise(Comtex Finance Via Thomson Dialog NewsEdge)BEIJING, Apr 16, 2006 (Dow Jones Commodities News Select via Comtex) --(Updates with analysts' comments; adds background) China's economy grew by a faster-than-expected 10.2% in the first quarter, as China struggles to rein in a bulging trade surplus and rapid investment. The economic data, revealed by President Hu Jintao Sunday, will add pressure on China to move faster on revaluing its currency ahead of Hu's April 20 meeting with U.S. President George W. Bush in Washington. Hu announced the data in a public appearance after meeting with Lien Chan, former chairman of Taiwan's Nationalist Party. The rise in first-quarter GDP was faster than the 9.9% rise in the fourth quarter and full-year 2005, and topped economists' expectations for a 9.7% increase. U.S. critics argue that China's rapid economic growth, partially fueled by its huge trade surplus, is the result of an undervalued currency that makes its exports artificially cheap. China's trade surplus widened to $11.19 billion in March, putting it on pace to surpass last year's record $102 billion surplus. Hu defended the unexpected surge in GDP as China tries to reduce its reliance on exports and investment-led growth. "Frankly speaking, we do not want or pursue too-rapid economic growth. We are focusing on the efficiency (and) quality of development and changing our growth model," Hu said. China hopes that by boosting private domestic consumption, it can rebalance its economy and achieve a gradual economic slowdown. But despite government attempts to cool investment in overheated sectors such as steel, investment spending remains the key driver of China's expansion. Fixed-asset investment rose 26.6% in the first two months of this year, outpacing the 25.7% rise in 2005. "The story here is investment powering ahead," says Stephen Green, senior economist at Standard Chartered in Shanghai. Despite statistical adjustments that may be pushing investment figures higher, Green says it appears government measures to cool investment have had a limited impact, and that pressure will build for new steps to cut investment growth. Rampant investment growth has led to energy bottlenecks, as well as gluts and narrowing margins in industries like steel, aluminum and copper. Mounting Pressure On Yuan In Washington, the new data should increase pressure on China to meet U.S. demands for a sharper rise in the value of the Chinese currency. Since China revalued the yuan by 2.1% versus the U.S. dollar last July, the yuan has risen by just over 1%. China has argued that it must move gradually on yuan reforms to give firms time to adjust to the new exchange rate regime. However, the yuan reforms seem to have had little impact on China's exports or overall growth so far. Isaac Meng, economist at BNP Paribas in Beijing, expects China's surplus will hit $130 billion this year, $28 billion more than last year's record surplus. The yuan closed slightly higher against the U.S. dollar Friday at CNY8.0157 to the dollar. China took further steps last week, making it easier for Chinese individuals and firms to invest abroad, which should increase the role of market forces in determining the yuan's value. However, the steps are unlikely to cause an appreciation of the yuan. -By Rick Carew, Dow Jones Newswires; 8610 6588-5848; [email protected] (END) Dow Jones Newswires 04-16-06 0536ET |